An economic expansion tends to cause the federal budget deficit to _ because tax revenues _ and government spending on transfer payment _. ![]() Gleck's argument is an example of the broken window fallacy. economy as it will create jobs for those involved in the clean up and reconstruction, and thus increase the amount of employment in the U.S. Suppose that Ben Gleck, a news analyst on the Coyote News Network, Argues that the tornado, while tragic, will have a positive impact on the U.S. decreases decreases It is estimated that the tornadoes in Alabama earlier this year caused $645 million of damage in Jefferson County, Alabama alone. Decreasing government spending _ the price level and _ equilibrium real GDP in the short run. Government budget deficits are mostly likely to increase during economic recession During a recession, what automatically happens to the government's budget situation? tax revenues fall, government spending increases, and the budget deficit gets larger. The stimulus strategy behind tax cuts will only be effective in Ricardian equivalence fails to hold, and people increase their spending. During recession, government expenditures automatically rises, because of programs such as unemployment insurance and Medicaid. increase decrease What is a benefit of giving the government freedom to spend more than they receive in taxes and run a deficit? It allows the government to be flexible if something unexpected happens. larger smaller An increase in government spending causes interest rate to _, which causes investment spending to _. The presence of automatic stabilizers means that the federal budget deficit is _ than it otherwise would be in a recession and _ than it otherwise would be in an expansion. government generally finances its debt by selling U.S. increase increase If there are multiple effects, then an increase in government purchases of $200 billion will shift the aggregate demand curve to the right by more than $200 billion The U.S. Which of the following is INCORRECT regarding tax revenues they increase during recessions Assuming the economy is represented by the graph shown, if the government were to enact a partially successful expansionary fiscal policy, it would be most likely to move from equilibrium Increase government spending is an example of expansionary fiscal policy In the short run, expansionary fiscal policy _ the price level and _ equilibrium real GDP. B.A lack of understanding regarding the current state of the economy creates an information lag One reason the government enacts fiscal policy instead of waiting for the economy to correct itself is the automatic adjustment can take a very long time. False The federal debt will not be a burden for future generations. The US government has never had a surplus. The current level of US government accumulated debt, when measured in nominal dollars: D. shorter than Currently, the US government accumulated debt to GDP ratio: A. expansionary fiscal policy lead to a budget deficit The time lag for monetary policy is typically _ the time lag for fiscal policy. During a recession, the government will want to implement _, but mayīe unable to do so because such a policy would _. smaller deficit Assume that laws have been passed that require the federal government to run a balancedīudget. Standardized employment budget will show a _ than the actual budget. the standardized employment budget When a country's economy is producing at a level that exceeds its potential GDP, the ![]() ![]() income tax is a progressive tax If the economy is producing less than its potential GDP, _ will show a largerĭeficit than the actual budget. Would over half the households in the country pay more in payroll taxes than in income taxes? B. If individual income tax accounts for more total revenue than the payroll tax in the U.S., why ![]() automatic stabilizers will decrease government spending and increase tax revenue. If Canada's economy moves into an expansion while its economy is producing more than
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